On Wednesday, the Federal Reserve cut interest rates for the third time in as many meetings. The last time that happened was 1998.

The Fed cited U.S. gross domestic product growth below 2% and ongoing trade war concerns as reasons for the latest cut. It wants to help stimulate economic growth.

I was worried about what that means for the stock market, so I asked experts Jeff Yastine and Michael Carr to explain what we should expect going forward.

And they said that the latest rate cut is actually bullish.

After all, if you look back, stocks have gained 20% in 12 months, on average, following three consecutive rate cuts.

S&P 500 Index returns after three 25 base point cuts

(Source: MarketWatch)

In today’s five-minute Market Insights, Jeff and Mike discuss why Wednesday’s rate cut means stocks will continue to go up and make new highs.

They talk about:

  • Interest rate cuts are helping the economy by making money incredibly cheap. Quote: “The Fed is doing all it can to boost stock prices. It’s really trying to keep this bull market alive. And it’s actually trying to keep the economy alive.”
  • The S&P 500 Index hit an all-time high this week despite the trade war and other concerns. Quote: “Eighty percent of companies are beating earnings expectations. That’s bullish. It’s really hard to find the catalyst for this bear market that everyone’s so worried about.”
  • As long as prices keep moving up, it’s still a good time to buy stocks. Quote: “New highs are bullish. … So until we’re in a downtrend, we’re in an uptrend. And that means buy.”

To watch their video now, click on the image below:

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Jay Goldberg

Assistant Managing Editor, Banyan Hill Publishing

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